The Nasdaq composite edged up 3.11, to 2563.17, even though declining stocks outnumbered gainers by a 3-2 ratio there also. The Russell 2000 index of small-company stocks fell 1.21, to 401.08.

A prominent loser of the day was Gillette, as investors shaved $7.75 off its shares, to $50. The consumer-products maker warned late Monday that first-quarter sales and profits would fall below the consensus Wall Street forecast.

Analysts said that except for Gillette's forecast, few major companies have issued warnings about first-quarter results, which begin appearing later this week. Internet service Yahoo!, expected to report results later this week, hit a record high $244 during the session but closed down $4.25, at $214.87.

Overseas Tuesday, blue-chip stocks in London rose 1.3 percent, to a record high, on hopes for an interest rate cut soon by the Bank of England. The London Stock Exchange had been closed Easter Monday. Earlier Tuesday in Tokyo, stocks closed at their highest level in eight months.

Sticks in the spokes: Widespread reports that U.S. corporate profits declined last year contrast sharply with general optimism about a rebound in 1999 profits.

Despite Gillette's warning Monday, analysts by and large say that year-over-year comparisons of earnings beginning with first-quarter reports will show improvement or at least few negative surprises.

Wall Street always focuses on quarterly earnings reports, but this time the focus appears even more intense. If conventional wisdom is wrong, there is little else to uphold the lofty levels of the major stock indexes. Just as there is no sign that the Federal Reserve will raise interest rates any time soon, there is even less of a sign that the Fed will cut rates.

Economists at Nomura Securities, in a recent report, noted the virtuous cycle of the lofty stock market fueling consumer optimism, which could boost corporate profits and share prices.

In addition to possible disappointments in corporate profit reports, another potential "stick in the spokes" of this cycle would be a significant boost in federal spending to pay for the war in the Balkans, the report said.

"The images from the stock exchange floors as the closing value Dow Jones industrial average breached the symbolic 10,000 stood in bizarre contrast to the tragic picture of refugees fleeing Kosovo," the Nomura economists wrote.

"While the financial markets seem almost oblivious to these events--for now at least--the escalating conflict could intrude into the exuberant public mood that a decade of peace and prosperity has brought to the U.S. economy."

Local news: Chicago-based communications company Tribune, publisher of this newspaper, is expected to sell 30-year debt securities designed to release part of the value of the company's ownership of 11 million shares in high-flying Internet stock America Online.

Tribune stock gained $3.87, to $70.31, after the company reported plans for the transaction to the Securities and Exchange Commission. The deal, aimed at institutional investors, enables Tribune to reap cash from AOL's remarkable stock price runup without immediately selling any AOL shares.

Dubbed by underwriter Merrill Lynch "participating hybrid option note exchangeable securities," or Phones, the securities will pay quarterly interest and will be exchangeable until maturity into AOL stock at a rate of 95 percent of the going price of AOL shares plus accrued interest. Bridge News said analysts estimated the yield on the securities at 2 percent.

The principal amount of the expected 5 million of Phones to be sold will equal the last sale price of AOL shares just before the offering. Tribune said it would use proceeds from the transaction--probably more than $800 million--for general corporate purposes.

The transaction is structured in a similar manner to Phones sold last month by Comcast against its holdings in AT&T stock. Last year, Tribune issued exchangeable debt securities related to its investment in a software developer, The Learning Co., which in December agreed to be acquired by Mattel.

- Baxter International, Deerfield, and three shareholder groups have agreed to a timetable whereby Baxter will develop alternatives to using environmentally harmful polyvinyl chloride in its products. As a result, the shareholder groups withdrew a proposal on the issue set to be presented to all Baxter shareholders.